Protective Life does upsized $250 million deal; Cedar Realty prices issue; preferreds end down

By Andrea Heisinger

New York, May 15 - The preferred stock market remained mostly stagnant on Tuesday, although one small deal and another larger one were priced.

Protective Life Corp. priced an upsized $250 million sale of $25-par 30-year subordinated debentures. The size was upsized from $150 million by early afternoon, a source said.

"It's doing well," the source added.

There was a small deal from Cedar Realty Trust, Inc. The $10 million, or 400,000, of preferreds sold early in the day but were not seen in trading, a trader said.

The secondary side of the market was "pretty dead," the trader said later. He quoted the new 5.625% series F trust preferreds from Southern California Edison Co.'s SCE Trust I as "still around $24.75." The trust preferreds were seen trading at $24.80 when they were freed on Monday and later at $24.70.

The preferred market was "moderately down again today, but not as bad as what the index shows," a trader said after the close.

He quoted the market as down 32 basis points, or about 8 cents per share on average.

"Out of the top five most active [deals], three were up," the trader said.

Most of those active bonds were recently priced issues.

Protective Life's 30-years

Protective Life announced and priced a $250 million sale of 6.25% 30-year subordinated debentures (Baa3/BBB/) at par of $25, an informed source said.

The size was originally $150 million but was upsized in the afternoon, a market source said.

Talk was between 6.25% and 6.375%, and the debentures were sold at the tight end of that range.

There is a call option prior to May 15, 2017 at $26 per $25 principal amount being redeemed, and the debentures can be called after that date at par plus accrued interest.

Wells Fargo Securities LLC is the active bookrunner. Passives are Bank of America Merrill Lynch, Barclays Capital Inc. and Citigroup Global Markets Inc.

Proceeds are being used to redeem one or more of the $100 million of 7.5% trust originated preferred securities due 2031 issued by PLC Capital Trust III, the $115 million of 7.25% trust originated preferred securities due 2032 issued by PLC Capital Trust IV and the $200 million of 7.25% capital securities due 2066 issued by Protective Life.

Protective Life provides financial services, insurance and investment products and is based in Birmingham, Ala.

Cedar Realty prices series Bs

Cedar Realty Trust priced $10 million, or 400,000 shares, of 7.25% series B perpetual cumulative redeemable preferred stock, according to an FWP filing with the Securities and Exchange Commission.

The preferreds were priced at $23 to yield 7.8804%. The proceeds totaled $9.2 million. The liquidation preference is $25 per preferred.

MLV & Co. LLC was the bookrunner. Sandler O'Neill & Partners, LP was the co-manager.

The preferreds are callable on or after May 22, 2017 at $25 plus accrued distributions. There is a change-of-control redemption feature at $25 plus accrued distributions.

Proceeds are being used to redeem an equivalent amount of outstanding 8.875% series A cumulative redeemable preferreds.

The real estate investment trust of supermarket-anchored shopping centers is based in Port Washington, N.Y.

SoCal remains most active

The top traded preferreds for the second day in a row were Southern California Edison's 5.625% series F trust preferreds.

A trader said 2.75 million trust preferreds changed hands, and they ended the day up 5 cents at $24.75.

In the No. 2 spot were U.S. Bancorp's series N preferreds, which had 1.2 million shares trade and ended the day up 3 cents at $25.70.

PS Business Parks Inc. saw 1.05 million of its 6% series T preferreds trade off 8 cents on the day to end at $24.50.

PNC Financial Services Group, Inc.'s recent 6.125% series P preferreds had 676,000 shares trade, and they ended the day off 12 cents at $24.98.

Rounding out the top five were Hartford Financial Services Group, Inc.'s 7.875% fixed-to-floating-rate 30-year junior subordinated debentures. Traders traded 635,000 of the debentures, and they ended the day up 6 cents at $25.96.

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